Labour Budget 2024: The key announcements

Chancellor Rachel Reeves has delivered the Labour Party’s first Autumn Budget, setting forth a bold agenda aimed at driving economic growth, supporting working families, and reshaping the UK’s tax system. This budget introduces substantial wage increases, tax reforms, and breaks for small businesses. Below is a summary of the most impactful changes, including adjustments to the National Living Wage, Employer National Insurance Contributions, Inheritance Tax and Capital Gains Tax.

1. Taxation changes

• Employer National Insurance Contributions: From April, contributions will rise from 13.8% to 15%. Additionally, the earnings threshold for National Insurance will be reduced from £9,100 to £5,000.

• Capital Gains Tax: The main rates of CGT will increase from 10% to 18%, and from 20% to 24%. In addition, CGT on carried interest will be raised to 32% from April 2025, with further reforms anticipated from April 2026.

• Inheritance Tax: The Inheritance Tax threshold freeze will continue until 2030. Additionally, reforms will see pension funds fall within the scope of Inheritance Tax from April 2027.

• Stamp Duty Land Tax: Starting tomorrow, the Stamp Duty Land Tax surcharge on second homes will rise by 2%, reaching 5%.

• Business Asset Disposal Relief: The rate of Capital Gains Tax for Business Asset Disposal Relief will rise to 14% in 2025 and then to 18% in 2026-27.

2. No further threshold freezes on Income Tax and National Insurance

Income tax and National Insurance thresholds will not be extended beyond the freezes previously enacted by the former government. From 2028-29, personal tax thresholds will instead adjust in line with inflation.

3. Abolishment of Non-Dom tax regime

The Chancellor announced the end of the non-dom tax regime, effective April 2025. In its place, a residence-based scheme will be introduced, ensuring the UK remains competitive for temporary residents. This measure is expected to raise £12.7bn over five years.

4. Support for Businesses

• Employment Allowance: Aimed at easing the tax burden on smaller businesses, the Employment Allowance will increase from £5,000 to £10,500, allowing 865,000 employers to pay no National Insurance contributions next year and providing over a million employers relief in maintaining or reducing their tax burden.

5. Wage increases

• National Living Wage: For those aged 21 and over, the National Living Wage will increase by 6.7%, moving from £11.44 to £12.21 per hour from April 2025.
• National Minimum Wage: Rates for younger workers will rise, with individuals aged 18–20 seeing an increase from £8.60 to £10, and apprentices receiving a notable boost from £6.40 to £7.55 per hour.

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